Conclusion
9.186 In this Chapter, the Commission considered the extent of competition in the supply of airfield services at Wellington International Airport. It found that the relevant market was one in which WIAL was by far the major supplier, faced little prospect of new competitors entering the market, and was not sufficiently constrained by the countervailing power of the airlines, and hence was one where competition was limited. The Commission applied its generic principles developed earlier in this report to calculate the appropriate asset base and WACC for WIAL. It then considered the returns that WIAL had made in the recent past, and the returns it was projected to make in future years, against target returns for those years based on realised or forecast demand and other costs. It also assessed the efficiency implications of control.
9.187 A critical assumption made by the Commission is that the costs of control would be borne by acquirers rather than the general public. After having netted-off all of the costs of control from the benefits to acquirers, the Commission has not found any net benefit to acquirers. Even the gross benefits are estimated to be small.
9.188 The Commission is not satisfied that the thresholds contained in section 52 of the Commerce Act are met in the case of the airfield activities supplied by WIAL to aircraft operators. The net benefits of control to acquirers per annum are consistently negative over the Commission's WACC range. The Commission, therefore, considers that on the balance of probabilities it is not necessary or desirable for the airfield activities supplied by WIAL to be controlled in the interests of acquirers.
9.189 The Commission's findings above in respect of WIAL, do not take account of the impact of any increase in charges that may yet occur as a result of its current consultation with users. As noted in paragraph 9.18, WIAL's current proposal is for landing charges to increase. A 10% interim increase from 1 July 2002 has already been announced by WIAL and was agreed with airlines. As the proposed further increase in charges has not been implemented the Commission has not incorporated any impact into its recommendations. However, if the proposed [...] increase in charges (to apply for the next five years) were factored into the Commission's forecasts for WIAL for 2003, significant excess returns would arise in that year (and the next four years), such that there would likely be net benefits to acquirers of up to [...] per annum. In that event, the Commission would likely be satisfied that it would be necessary or desirable in the interests of acquirers for the airfield activities supplied by WIAL to be controlled.
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